An Overview of the Miller Act
The purpose of this post is to provide a brief synopsis of the Miller Act’s purpose and required procedures. Under the Miller Act, the prime contractor awarded a government contract is required to post a payment bond, generally in the amount of its total contract price. See 40 U.S.C. § 3131(b)(2). If a subcontractor is not paid for its completed work, it may request a copy of the prime contractor’s payment bond from the project’s contracting officer. The subcontractor must then demand payment from the prime contractor and surety.
I. REQUEST FOR PAYMENT BOND
To obtain a copy of the payment bond, a subcontractor must submit an affidavit to the project’s contracting officer stating that (1) it supplied labor or material for work described in the contract and (2) it has not been paid for that work. See 40 U.S.C. § 3133(a). A subcontractor may also obtain a copy of the payment bond by submitting an affidavit stating that it is being sued on the bond. See id. Before providing a copy of the payment bond, the contracting officer may request a copy of the subcontractor or sub-subcontractor’s contract relating to the project.
II. RIGHT TO FILE CIVIL ACTION ON THE PAYMENT BOND
Two “tiers” of subcontractors may file lawsuits against a prime contractor’s payment bond: a subcontractor (first tier) and a sub-subcontractor (second tier).
A. First Tier: Subcontractor
A subcontractor that has not been paid in full within 90 days after completing its work may file a lawsuit for payment on the prime contractor’s payment bond. 40 U.S.C. § 3133(b)(1). The Miller Act defines a subcontractor as one who has a direct contractual relationship with the prime contractor. See id. The United States Supreme Court has further defined a “subcontractor” as “one who performs for and takes from the prime contractor a specific part of the labor or material requirements of the original contract” which excludes “ordinary laborers and materialmen.” Clifford F. MacEvoy Co. v. U.S. for the Use and Benefit of Calvin Tompkins Co., 322 U.S. 102, 107 (1944).
Because the subcontractor has a direct contractual relationship with the prime contractor, the Miller Act does not require the subcontractor to provide the prime contractor with notice that it has not been paid. However, it is recommended that a subcontractor send a notice similar to the one described below that a sub-subcontractor would provide to the prime contractor.
B. Second Tier: Sub-Subcontractor
A sub-subcontractor may file a lawsuit against the payment bond only if it provides a written notice to the prime contractor within 90 days after completing its work. 40 U.S.C. § 3133(b)(2). The Miller Act defines a sub-subcontractor as one who has a direct contractual relationship with a subcontractor. Id. If a sub-subcontractor does not have contract with a “subcontractor” as defined above, it may not bring an action against the payment bond.
i. Notice to prime that sub-subcontractor’s work has not been paid
The Miller Act requires that a sub-subcontractor’s notice to the prime contractor meet three conditions: (1) notice must be given within 90 days of the sub-subcontractor’s last work; (2) the notice must “stat[e] with substantial accuracy the amount claimed”; and (3) the notice must include “the name of the party to whom the material was furnished or supplied or for whom the labor was done or performed” (i.e. the name of the subcontractor). 40 U.S.C. § 3133(b)(2) (emphasis added). In Indiana, the notice does not require an explicit demand for payment (i.e. a statement notifying the prime that the sub-subcontractor wants payment for its completed work). See U.S. ex rel S And G Excavating Inc. v. Seaboard Sur. Co., 236 F.3d 833, 885 (2001). However, other states may require an explicit demand. As such, it is recommended that an explicit demand for payment from the prime contractor be included in the notice.
ii. Method of sending notice to prime
The Miller Act states that the sub-subcontractor’s notice to the prime contractor must be sent “by any means that provides written, third-party verification of delivery to the [prime] contractor” (i.e. certified mail or other similar means) and can be sent to the prime contractor’s office, to the location where it conducts business or to its residence. Because the Miller Act is meant to be construed most favorably to those who performed work on a project and have not been paid (see id.), courts may be lenient about the method used to serve the notice, but the recommended practice is certified mail with a request for a return-receipt.
III. NOTICE TO SURETY
The Miller Act does not require that any notice be sent to the surety that posted the prime contractor’s payment bond. See 40 U.S.C. § 3131 et seq. However, because an unpaid subcontractor or sub-subcontractor may be paid by the surety without having to file a lawsuit, it is recommended. A notice to the surety may also let the prime contractor know that the subcontractor is serious about its request for payment. A notice should be sent to the surety concurrently with the notice sent to the prime contractor seeking payment from the bond. The surety will likely require that the subcontractor provide copies of its contract, invoices, change orders, etc. The subcontractor should compile the requested documents and return them to the surety. If the surety does not pay the claim, a lawsuit may be required.
IV. FILING A CIVIL ACTION
Lawsuits against payment bonds must be filed in a federal court in the district where the project was located and in the name of the United States for the use of the unpaid subcontractor or sub-subcontractor. 40 U.S.C. §§ 3133(b)(3)(A) and (b)(3)(B). A lawsuit filed against the bond may only seek the unpaid amount as of the date the lawsuit is filed. 40 U.S.C. §§ 3133(b)(1) and (b)(2). A lawsuit by a subcontractor against the prime must be filed within one year from the date the subcontractor’s work is completed. 40 U.S.C. § 3133(b)(4). Furthermore, the Miller Act does not provide an award of attorney’s fees to the prevailing party in a civil lawsuit. See 40 U.S.C. § 3131 et seq. However, the Miller Act does not prohibit recovery of attorney’s fees; there must be some other basis (either contractual or statutory) for recovery of attorney’s fees. See F. D. Rich Co., Inc. v. U. S. for Use of Indus. Lumber Co., Inc., 417 U.S. 116, 131 (1974).